Crude oil in New York added 2.2 per cent this week and was at $82.85 a barrel at 4:38 p.m. Singapore time after a decline in U.S. inventories. Tighter LPG supply was reflected in a sale this week by Saudi Aramco, the largest supplier to Asia, at more than $700 a tonne. Prices of butane, the variety of LPG preferred by Asian companies for processing into chemicals, also surpassed naphtha for the first time this year.

“LPG is no longer attractive as an alternative to naphtha as a petrochemical feedstock,” said Hou Lingwan, Taipei-based trading manager at CPC Corp.’s LPG business division. The company, Taiwan’s state refiner, started replacing some naphtha with butane in March as naphtha prices gained.

Typically, a price difference of $60 a tonne would entice chemical producers to replace some naphtha with LPG. Butane was almost $20 higher than naphtha yesterday. That’s in sharp contrast to July when naphtha averaged $76 a tonne higher than butane, according to data compiled by Bloomberg.

Saudi Aramco sold a 44,000-tonne cargo of equal parts propane and butane for end-October shipment from the Red Sea port of Yanbu to Shell International Trading & Shipping Co. Propane was sold at $710 a tonne, while butane fetched $735 a tonne.

Shipments from the Dhahran of Saudi Arabia-based company are likely to be further curtailed by maintenance at an LPG export terminal in Yanbu. The planned closure may cut the company’s loading capability by between 30 and 50 per cent in November.

Consumption of LPG, used for heating and cooking in Asia, typically rises in winter, said N. Ravivenkatesh, a Singapore- based analyst at Purvin & Gertz Inc.

“Soaring international LPG prices may hurt demand in the price-sensitive residential and commercial sectors, eventually leading to a downward price correction,” Ravivenkatesh said. For petrochemical makers, “the economics of cracking LPG instead of naphtha is forecasted to be unattractive in November and December,” he said by telephone yesterday.